emerging issues for the chicago housing market · 2019-04-08 · zombie properties defined...

WOODSTOCK INSTITUTE | DECEMBER 2015

December 2, 2015

Emerging Issues for the

Chicago Housing Market

Spencer M. Cowan | Senior Vice President

Woodstock Institute | Chicago, Illinois

P 312.368.0310 | F 312.368.0316

[email protected]

@woodstockinst

WoodstockInstitute

mailto:[email protected]

Overview of Topics


• Negative equity

• HAMP and HELOC resets

• Mortgage lending and disparities

• Zombie properties

Bubble, Bust, and Some Recovery


Fully Recovered Partially Recovered Not Recovered

Source: Raymond, Elora, Kyungsoon Wang, and Dan Immergluck. 2015. Race and Uneven Recovery:

Neighborhood Home Value Trajectories in Atlanta before and after the Housing Crisis

Cook County Price Index


Chicago Region Data


• Mortgage data for 4th Q 2011, zip code

level, included:

– LTV range

– number of mortgaged properties

– total amount of mortgage debt

– total value of mortgaged properties

• Merged with 2010 census data

Negative Equity by Race


Home Equity by Race


Uneven Recovery, 2010 to 2014


Negative Impacts of Negative Equity


• Drives foreclosures

– can’t refinance or downsize

– increase risk if LTV > 110

– 7 times greater if LTV >150

• Limits opportunity

– can’t move

• Reduces incentive to maintain property

– increases blight, with spillover effects

Policy Implications


• Need to find ways to get homeowners out

of negative equity status

– principal reduction

– short sale, deed in lieu

• Need to act soon

– avoid spillover

– threat increase with resets on HAMP

modifications and HELOCs

HAMP and HELOC Resets


• HAMP modifications

– 40 years, payment based on current income

– rate reset in two years

– balloon payment at end of term

• HELOCs

– 10 year, interest only

– then fully self-amortizing

Mortgage Lending and Disparities


• CFPB QM and QRM rules

– ability to repay standard limited DTI ratio

– banks are more risk-averse

– TRID requirements

• Rise of nonbank lenders

– pullback by banks

– Countywide again?

– 18% of GBLs in 2010, 64% now

Potential Steering

WOODSTOCK INSTITUTE | DECEMBER 2015Source: HMDA 2010

Potential Redlining

WOODSTOCK INSTITUTE | DECEMBER 2015Source: HMDA 2010

Potential Redlining Mapped


Zombie Properties Defined


• Zombie properties are

– properties stuck in the foreclosure process

– foreclosure action filed

– case unresolved for more than three years

– no transfer of title on record

• Zombie properties are not

– necessarily vacant or abandoned

Estimated Number of Zombies


Spatial Distribution of Zombies


Policy-related Issues


• Zombie properties are concentrated in

lower-income neighborhoods

• Impact will depend on condition of the

property

– servicers may not maintain properties in some

neighborhoods as well as in others

• Zombie properties may further destabilize

already distressed neighborhoods

– hindering recovery


December 2, 2015

Emerging Issues for the

Chicago Housing Market

Spencer M. Cowan | Senior Vice President

Woodstock Institute | Chicago, Illinois

P 312.368.0310 | F 312.368.0316

[email protected]

@woodstockinst

WoodstockInstitute

mailto:[email protected]

emerging issues for the chicago housing market · 2019-04-08 · zombie properties defined...

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